Business start-up loan

Almost all of us have the same dream – owning a home, seeing our children head off to college. This common dream is the one we all want to achieve if not today but hopefully in the future. And owning a small business is one way to make our dream come into a reality.

According to financial statistics millions of our population achieve of owning a small business every year. However, more than this number cannot achieve the same goal because they do not have the capital to start their own business. Most of them do not have a credit history to pursue a business start-up loan.

Some thinks that the way to capital is very easy to achieve. However, there are disadvantages why is encouraged to invest in a business start-up loan.

Here are some of the reasons:

An inexperience manager operating a business and utilizing a business credit is one of the major factors why it is difficult to achieve a business start-up loan.

Risk is the other reason. Credit institutions, banks and other financial institutions are risk adverse. Yes, their business is to lend money, charge their interest rate to you while you use their money. They would rotate it again once you paid them on the next loan. The bad news is that they want to invest in a sure ball win where their money will be back to them. Unfortunately, they see a business start-up loan as a risky venture. Most of them do not want to take chances with their money.

You cannot blame them because in reality thousands of business open and close permanently in the United States every year. Some fails because the business idea is not as good as it was originally thought. Some fail because the management is inexperience and there is too much negligence in the business. Some fails because the business owners does not seem to have the enough start up money to pay for the on-going financial struggle of the business that is trying hard to break through into the competitive market place.

Banks are aware of these flaws. In Addition, they are even aware of the fact that a greater percentage of businesses do not make it pass the first year of operation where the attrition rate is staggering.

This is the reason why applying for a business start-up loan is difficult, but, hey, this does not mean it is impossible to get one. On a lighter note, there are even financial institutions, and credit unions that specifically cater business start-up loans.

How to get a business start-up loan?

Preparing a solid business plan is one way to win the heart of a credit union or banks. Your plan should have a survey and an intensive report of similar businesses that exist in the market. You need to provide true facts that the business that you want to start provides a good profit. You also need to include on your report that your product or service is in demand and how you will provide the demand.

You need to convince the bank or the credit institution that your business can survive even before you will consider a business start-up loan. Some banks may require a co-signer of the loan, personal guarantees or even collateral to back up your business start-up loan application. You need to prepare to have these once you apply for one.